Not All Durable Powers of Attorney Are Created Equally: Avoid These Mistakes

The phrase ‘Durable Power of Attorney’ is frequently used but often misunderstood as to who needs it, when it should be created, and what the document does. The goal of this blog is to correct misunderstandings among consumers and professionals and encourage all adults to create a Durable Power of Attorney when they are physically and mentally healthy.

The word ‘Durable’ means that the document allows financial decisions to be made during a time when a person is physically, mentally, or cognitively incapacitated. Incapacity can result from an automobile accident causing head trauma, an advanced illness such as cancer, or cognitive impairment caused by dementia or Alzheimer’s disease. A Durable Power of Attorney allows a competent adult to delegate responsibility to make their financial decisions to a trusted person (the agent) without making that trusted person an owner of the assets. Consequently, the assets of the incapacitated adult are protected if the agent gets divorced or sued. Another benefit of the document is that it allows the incapacitated adult’s financial affairs to be handled privately without Court supervision (i.e., a guardianship), which is time-consuming and expensive.

Here are some tips to help you be prepared for your future:

Every Adult Needs a Durable Power of Attorney: Incapacity can happen at any time without warning so the best time to create a Durable Power of Attorney is when a person becomes a legal adult. Your Durable Power of Attorney should be updated as life circumstances change (i.e., marriage, divorce, death, or incapacity of the agent).

Customize Your Durable Power of Attorney To Meet Your Needs: An experienced elder law attorney can advise you on what type of decision-making authority you need in your Durable Power of Attorney. Everyone has different types of income, assets, and family dynamics, so your document should be tailored to your needs and goals. If you go to a non-elder law attorney or download a document from the internet, there is a good chance it will not meet your needs when you need it to.

Sign A Durable Power of Attorney When You Understand What You Are Doing: Because there are misconceptions, many people don’t seek the assistance of an elder law attorney until it is too late. A person must understand what they are doing when delegating financial authority to another person. A high level of awareness and comprehension is required, including being able to identify a person’s assets and income.

Consulting with an experienced elder law attorney can help ensure that the document is drafted correctly and meets state law requirements.